On deck cargo and exclusion clauses: The “ELIN”

Whilst this case originated as a routine claim for cargo loss and damage involving cargo on deck and under deck, it gave rise to a number of disputed issues.  In a bid to streamline the ensuing High Court proceedings, the court ordered that a preliminary issue be heard which dealt with liability for deck cargo.

This reads:

Whether, on a true construction of [the Bill of Lading], the Defendant is not liable for the loss or damage to any cargo carried on deck howsoever arising, including loss or damage caused by unseaworthiness and/or the Defendant’s negligence”.

On its reverse, the bill of lading contained a standard provision:

“The Carrier shall in no case be responsible for loss of or damage to the cargo, howsoever arising … in respect of deck cargo.”

On its face there was additional wording:

“…loaded on deck at shipper’s and/or consignee’s and/or receiver’s risk; the Carrier and/or Owners and/or Vessel being not responsible for loss or damage howsoever arising.”

The parties agreed the following points of law:

  • The Hague/Hague Visby Rules did not apply because Article I(c) excludes deck cargo identified as such on the bill of lading and carried on deck.
  • At common law there is an implied term, which is absolute and not qualified by due diligence, that the ship will be seaworthy before and at the commencement of the voyage to undertake the contractual voyage.

Cargo interests argued that the provisions of the bill of lading were not effective to exclude the carrier’s liability for negligence or unseaworthiness in respect of deck cargo.  Although a spoiler alert should, perhaps, have been issued, in short, their arguments failed.

By way of background, twenty years ago, Bentleys acted for the owners of the “IMVROS” in a case where we successfully argued that a term in a bill of lading excluding liability for damage to deck cargo “however caused” was effective to include damage caused by unseaworthiness. (The “IMVROS” [1999] 1 Lloyd’s Report 848) However, in that case the underlying dispute concerned parties to a time charterparty, and the judge’s decision on that point was obiter – i.e. not necessary for his decision.  This case has been the subject of judicial and academic criticism over the years but until now the point had not arisen directly for fresh consideration.

Twenty years ago, Bentleys acted for the owners of the “IMVROS” in a case where we successfully argued that a term in a bill of lading excluding liability for damage to deck cargo “however caused” was effective to include damage caused by unseaworthiness.

English law is thought to be out of step on the point with some other important jurisdictions, notably Singapore and Canada, and this may have been the start of a campaign on cargo interests’ part to get the points of principle up to the higher courts for a reconsideration.

The cargo interests’ arguments focused on two principal strands.

Firstly, the argument went that the common law obligations of seaworthiness and of not acting negligently in carrying the cargo were such fundamental ones that if a wording was to be sufficiently clear to exclude them then it should say so in express terms. The judge was urged to review a long line of authorities starting with Canada Steamship Lines Limited v R [1952] AC 192 which discuss the approach to the interpretation of exclusion clauses.  Cargo interests argued that the correct approach was to consider whether an exclusion clause would have meaning if liability for negligence or unseaworthiness was not excluded – if it would, then that was how it should be understood. After a detailed review of the authorities, however, the judge concluded that case law obliged him to construe the clauses “to see what they plainly mean to any ordinarily literate and sensible person having all the relevant background knowledge which would reasonably have been available to the parties …….at the time the contract was concluded.”

As a result he decided:

The words of exclusion are clear.  The Owner has no responsibility for cargo carried on deck whatever the cause. ...The exclusion covers any and every cause and there is no justification for excluding either negligence or unseaworthiness as a cause.”

The cargo interests’ second strand of argument was either that there was no authority on the point or that anything in support of owners’ argument was wrong. This led to an analysis of the judgment in the “IMVROS” case and a consideration of the academic and judicial criticism to which the decision has been subject in Canada and Singapore.

His conclusion was that very similar words had been held to exclude liability for negligence causing loss of cargo in the cases of Travers v Cooper [1915] 1 K.B. 73 and the “DANAH” [1993] 1 Lloyd's Report 351, neither of which had been criticisedFurtherthat the decision in the “IMVROS” was consistent with other previous authorities.  He could see nothing of significance that distinguished them from the present case or which could give rise to academic criticism:

“Words of exemption which are wider in effect than "howsoever caused" are difficult to imagine and, over the last 100 years, they have become "the classic phrase" whereby to exclude liability for negligence and unseaworthiness.

Words of exemption which are wider in effect than "howsoever caused" are difficult to imagine and, over the last 100 years, they have become "the classic phrase" whereby to exclude liability for negligence and unseaworthiness.

Stephen Hofmeyr QC

Aprile SpA and Others v Elin Maritime Ltd (The “ELIN”) [2019] EWHC 1001 (Comm)

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